The dollar strengthened after the Federal Reserve raised rates on Wednesday and signaled another increase later this year. The Bloomberg Dollar Spot Index rose as much as 0.5%, hitting its highest since Aug. 14. The FOMC unanimously boosted the benchmark rate by a quarter point, and the dot plot showed another hike. Fed Chairman Kevin Warsh reiterated inflation concerns.

"Warsh sounds hawkish as well, giving the dollar another boost," said Valentin Marinov of Credit Agricole. The pound fell as much as 0.7% against the dollar ahead of the Bank of England meeting. The yen lost as much as 0.5%, touching 155.94 per dollar. Wells Fargo closed its long-yen trade.

Before the hike, the dollar advanced in September with long-end Treasury yields as inflation ran above expectations and oil rallied. Warsh had prepared markets at Jackson Hole. Traders priced a 90% chance of the hike and now expect another this year.

"The dots skewed hawkish," said Noah Buffam of CIBC. Hedge funds trimmed bullish dollar wagers to about $19.4 billion in the week ending Sept. 8, down from nearly $50 billion in late July.